News As We Read- 12th June'13

Thought of the Day:

Did you know?

Following made the Headlines:

India:

• In Young India, Re Now Almost a Senior Citizen: All the king’s men stepped out on Tuesday to prop up a battered rupee and deal a blow to currency speculators. As the rupee plunged to a new low, the government’s Chief Economic Advisor, Raghuram Rajan, said India is planning to float either sovereign or nonresident bonds as well as liberalise rules on foreign direct and portfolio investments. Arvind Mayaram, secretary at the department of economic affairs, told reporters that the demand for dollars to buy gold has declined from a peak of $227 million to $7 million a day. And, a stubborn RBI sold dollars as the rupee’s rapid fall threatened to unsettle fiscal calculations and revive fears of a downgrade. The impact was swift. Within minutes, the rupee recovered in afternoon trades from a lifetime low of 58.98 to close the day at 58.39 against the dollar. But it was still weaker than Monday’s closing of 58.15. As exports and imports are inelastic in the short run, a back-of the-envelope calculation shows growth dips over 0.1% due to a direct trade impact for a 10% fall in rupee, said Sujan Hajra, chief economist at Anand Rathi Securities. The rupee has declined 7.5% since May 1. But is the worst over? “The reality is all currencies in the emerging market basket are under pressure,” said Hitendra Dave, head-global markets at HSBC.

• Infy on Global Hunt for CEO: Infosys has hired executive search firm Egon Zehnder for a “global mapping exercise” to identify and shortlist possible external candidates who could be considered for the position of chief executive officer, two persons aware of the development said. While this does not mean the next Infosys chief executive will be an outsider, it does signal that a succession planning exercise has been put in motion at India’s second-largest software exporter, which has been drawing flak from critics for underperforming the industry. On June 1, in an unusual move, the Bangalore-based company recalled retired co-founder NR Narayana Murthy to helm it as executive chairman for five years. “The mapping exercise is meant as a landscape scan to draw up a list of possible executives who could potentially fit the bill,” said a source with direct knowledge of the development. “After that, it is up to the board to decide whether they want to go ahead with deeper conversation with any of the shortlisted candidates to gauge their suitability for the job.”

• Without Drivers, Car Sales Dip for Seventh Month: The Indian car market slipped into its longest period of slump in May with sales declining for the seventh straight month despite high discounts on offer, forcing carmakers to cut production and triggering fears of job losses. Car sales in May fell 12% year-on-year, the steepest fall since February’s 25% decline, data released by the Society of Indian Automobile Manufacturers (SIAM) showed. “This is a grave sign for the automobile industry as it’s the longest stretch of consecutive car sales decline witnessed ever,” Vishnu Mathur, director general at the carmakers’ association, said. “Even during the 2008-09 downturn car sales dipped for a few months and recovered back strongly. These are worrying trends for the Indian automobile industry,” he said. According to SIAM, carmakers sold 1,43,216 vehicles in May, the lowest monthly sales since December last. The association now expects job losses as the once booming domestic car market is now witnessing regular production cuts by various companies as sales have been declining for the larger part in the past one year. Market leader Maruti Suzuki, for example, had announced closure of all its five plants for eight days in June to reduce its swelling inventory at factories and dealerships as well as for periodic maintenance. “The initial signs are not good. For the first time, in May, retail sales or deliveries to customers were weak,” said a senior Maruti Suzuki executive. “The traffic at our showrooms had declined and the conversion to actual sales has also shown a declining trend,” the person added. Maruti Suzuki’s domestic sales declined 8.25% year-on-year to 66,342 units last month, while its closest rival, Hyundai Motor India, posted a marginal increase of 0.35% to 32,052 cars. Tata Motors’ passenger car sales slumped 49% to 8,927 units in May.

• Oberoi Group Inaugurates 252-room Hotel in Dubai: The Oberoi Group has opened a 252-room hotel in Dubai that overlooks the world’s tallest building Burj Khalifa. “The opening of the hotel is significant for us. A number of Oberoi Hotels have been consistently recognised as amongst the best in the world. I am confident that The Oberoi, Dubai will continue this tradition,” said PRS Oberoi, executive chairman of The Oberoi Group. The hotel in Dubai is the group’s first in the UAE.

• Bulgari Books India Return, May Tie Up a Silent Partner: Italian luxury firm Bulgari is in the process of finalising a local partner for its proposed reentry into India’s high-end merchandise market, three persons familiar with the matter said. The seller of pricey jewellery, watches, leather goods and accessories had exited India in April 2011 after ending a seven-year tieup with a Mumbai-based firm to run monobrand stores. This time round, the brand intends to have more control over its operations. “Bulgari is making an attempt to come on its own and is in the process of setting up a store,” one of the persons said. “This time, they will go in for a silent partner due to regulatory requirements.” Bulgari did not respond to emailed queries sent by ET seeking information on the talks. However, persons in the know said the company plans to open a single-brand store in south Delhi in a couple of months. Bulgari was bought by the world’s No 1 luxury group, LVMH, in 2011. Franck Dardenne, general manager of LVMH Watch & Jewellery India, said, “Bulgari is considering options, but I will be in a better position to answer in the next six months.” India’s luxury market is expected to reach $14.73 billion by 2015 from an estimated $8.21 billion this year, compelling several international luxury brands to have a relook at the market. India allows 100% foreign direct investment (FDI) in single-brand retail and 51% in multi-brand retail, but the opening up of this sector comes with the rider that 30% of sourcing should be done locally. The sourcing clause, however, is a deterrent for most international luxury brands, which are currently operating in the country through joint ventures, franchisees or silent partners. Rome-headquartered Bulgari was founded in 1884 by silversmith Sotirio Bulgari as a single jewellery shop. The company, famous for its colored stone jewellery and watches that have a unique serial number, also operates luxury hotels and resorts. It had a turnover of over Euro 1 billion in 2010. Latest sales figures were not available, as LVMH does not share brand-specific revenue details. In 2004, Bulgari had joined hands with Dia Group’s sister concern, Lifestyle Tradelinks India, to open two standalone stores in Mumbai and Delhi. The stores, however, closed down after seven years. “The sales were good, but some problem cropped up between the brand owners and the franchise partner,” said another person who did not wish to be named. Like Bulgari, high-end Swiss watch brand Jaeger-LeCoutre (JLC) is also considering reopening a standalone store in India by early next year. JLC had opened a mono-brand store in DLF Emporio in 2007 in partnership with Kapoor Watch Company, but closed it the following year. “The time was not right then,” said Dinesh Aswani, India manager for JLC. The company’s watches are sold at 11 points of sale in India, priced between 3.5 lakh and 13.5 crore. “We are looking to open a standalone boutique in partnership with one of our existing retailers,” he said without giving any details. Arvind Singal of Technopak, a retail consultancy firm, said, “Most brands have tasted success in China and see a similar potential in India in the coming years, and this is why they want to control the brand’s distribution, sales and marketing, so that they are better placed when the market really opens up.”

• Global Buyers Expand India Sourcing for Apparel Units: With more and more apparel units addressing the issue of child labour, global buyers such as Walmart and Zara have preferred to expand their merchandise sourcing from India which may fetch more business of $3 billion in 2013-14, garment industry body AEPC said on Tuesday. The Apparel Export Promotion Council (AEPC) said that factory compliant manufacturing in India has surged with new and unprecedented export orders in the current season. “In the present volatility in international buying, brands have preferred expanding their merchandise sourcing from India. The flow of expansion of orders in India is expected to fetch additional $3 billion (around 17,500 crore) business in the country,” it said. In 2012-13, the apparel exports fell by 5.76% to $12.92 billion due to demand slowdown in the US and EU markets. These are the biggest markets for India’s garment sector. AEPC said global chain stores and brands maintain the highest standards of factory compliance.

• Havells India Set to Enter Hospital Biz: QRG Enterprises, the promoter group of the 7,200-crore worth Havells India, a top electrical equipment company, plans to diversify into healthcare by setting up a chain of hospitals at an investment of about 1,000 crore over the next five years. “We aim to reach a target of 1,200 beds in the next five years,” Havells Joint Managing Director Anil Rai Gupta told ET. Saying that the Havells brand stands for trust, he hopes to leverage his existing business for the new venture. The group has been running a tertiary hospital in Faridabad since 2007 and now plans to expand in the sector under the ‘QRG’ brand. This could mean a chain of four to six multispecialty hospitals within the next few years. The company plans to use a mix of debt and internal accruals to finance its expansion. To begin with, the group’s geographical focus would be on north India-—particularly the cities in and around the National Capital Region along with Ludhiana, Agra, Jaipur, among others, where it would soon start scouting for suitable locations. In addition to its existing tertiary 140-bedded multispecialty hospital, the firm is in the process of establishing a 450-bedded state of the art super-specialty facility in Faridabad, which should be commissioned by September. This facility, built with an investment of close to 270 crore, would be called QRG Health City. Rai Gupta explained how his group got interested in healthcare five years back. “A family friend wanted to exit the Faridabad facility because it had got into some sort of dispute. He approached us and we decided to buy it. For the first three-four years, it was more of a CSR venture for us, but the learning from running that facility proved to be very valuable,” he said. Almost around the same time, the Rai Guptas were internally debating whether the group should enter education or healthcare sector. Gupta believes that the Havells’ brand would give a boost to QRG’s healthcare ventures.

International:

• Google to buy maps app Waze: Google announced on Tuesday it had struck a deal to buy Waze, a popular crowd-sourced map app designed in Israel. The US Internet search giant did not reveal the price of the acquisition, but Israeli media over the weekend estimated the deal was worth more than $1 billion. “To help you outsmart traffic, today we’re excited to announce we’ve closed the acquisition of Waze,” said Brian McClendon, vice president of Google’s Geo products, which includes Google Maps, Earth and Street View. “This fast-growing community of traffic-obsessed drivers is working together to find the best routes from home to work, every day.” McClendon said that Waze’s development team would remain in Israel and operate separately “for now.” “We’re excited about the prospect of enhancing Google Maps with some of the traffic update features provided by Waze and enhancing Waze with Google’s search capabilities.”

• Wal-Mart's tech arm acquires analytics startup Inkiru: Wal-Mart's e-commerce unit, @WalmartLabs, has acquired startup Inkiru, which has developed predictive analytics technology that Wal-Mart will use to improve personalization, search, fraud prevention and marketing in its online retail efforts. Wal-Mart expects to reap about $10 billion of its projected $466 billion in 2013 revenue from global online shoppers.

• Amazon launches Prime Fresh to account for groceries: Amazon has debuted an offshoot of the Prime program in conjunction with launching grocery-delivery service AmazonFresh in Los Angeles. Residents who are Prime members can try AmazonFresh for free for 90 days. After that, they can pay $299 annually for Prime Fresh membership, which includes free same-day or overnight delivery of any order worth more than $35 of groceries and other items.

• Top paid CEO in U.K. is an American woman: New research shows Burberry boss Angela Ahrendts was the highest paid CEO in the U.K. last year, raking in a total of £16.9 million ($26.3 million). American-born Ahrendts made nearly £5 million more than the next highest paid CEO, Angus Russell, from pharmaceutical giant Shire. The latest pay package details were revealed in an annual survey by corporate governance firm Manifest and remuneration consultancy MM&K. It's the first time since the survey was launched 15 years ago that a woman has taken the top spot. Only three women occupy the CEO seat at major British companies -- Alison Cooper at Imperial Tobacco and Carolyn McCall at budget airline EasyJet make up the trio.

• Apple refreshes Macs and iOS, unveils iTunes Radio: Calling it "the biggest change to iOS since the introduction of the iPhone," Apple CEO Tim Cook on Monday unveiled an operating system for iPhones and iPads that will radically overhaul how users' touchscreens look. The new system, iOS 7, was part of a two-hour presentation that included refreshed MacBook Airs, the announcement of an iTunes Radio streaming-music service and a sneak peek at a new Mac Pro that will be the most powerful computer Apple has ever made. The keynote, kicking off Apple's annual Worldwide Developer's Conference, marked Apple's first major product event in nine months. But it was short on blockbuster launches or surprises -- no TV, no smartwatch and no upgrades to marquee products like the iPhone and iPad. Some pundits griped about a lack of groundbreaking hardware or features at a time when Apple is facing a stock-price slump, increasing competition from rivals like Samsung and a gnawing perception that the giant computer company is not as bold or as cool as it was under Steve Jobs, its late CEO and co-founder. Instead, developers assembled for the weeklong conference got the first look at a major reworking of Apple's mobile operating system, due this fall. iOS is home to more than 900,000 apps that collectively have earned independent developers $10 billion, according to Apple. The mobile design, overseen for the first time by new iOS boss Jony Ive, includes new typography, redesigned icons and a new color palette. "I think there is a profound and enduring beauty in simplicity, in clarity, in efficiency," Ive said in a video introducting iOS 7. "True simplicity is derived from so much more than just the absence of clutter and ornamentation. It's about bringing order to complexity."

• VF Corp. Initiative: $17.3B Revenue Target by 2017: VF Corp. at its investor meeting today said it has a strategy and key initiatives that has a revenue target of $17.3 billion and $18 in earnings per share by 2017. The plan represents a five-year compounded annual growth rate of 10 percent, comprised of 8 percent organic growth and 2 percent growth anticipated from acquisitions. Eric C. Wiseman, chairman and chief executive officer, said, "VF’s model — consisting of powerful brands supported by powerful platforms — continues to deliver outstanding value to shareholders."

• Retail Drives Prada's Growth: Prada SpA posted a 13.5 percent increase in net profits in the first quarter, lifted by the strong performance of its retail division, and growth in the Asia-Pacific and the U.S. In the three-month period ended April 30, the Italian luxury firm’s net profits climbed to 138.2 million euros, or $181 million, compared with 121.7 million euros, or $160.6 million, in the same period the previous year. Revenues gained 13.9 percent to 782.3 million euros, or $1.02 billion, from 686.7 million euros, or $906.4 million. Figures are converted at average exchange rates for the three-month period. “In an international economic environment that remains extremely volatile and uncertain, the Prada Group has recorded another highly positive quarter, continuing along its path of development founded on solid and lasting growth,” said chief executive officer Patrizio Bertelli. “In 2013, we will again concentrate on the international expansion of our retail network but without moving away from tight control over costs and working capital, also in order to safeguard our cash-flow generation.”

• H&M Taps Isabel Marant: Isabel Marant has a new fit model: her 10-year-old son, Tal. The Paris-based designer — who is creating her first looks for men and youngsters as H&M’s next guest designer — said he even gave her feedback on the scale of prints on the prototypes. The range for girls and boys spans about 30 items of clothing and 10 accessories, and is sized, European style, by height — from 134 to 170 centimeters (roughly size 9 to 15 in the U.S.). Marant declined to reveal fashion details of the one-off collection that will debut on Nov. 14 in more than 250 H&M locations and online. But the core women’s range — spanning 42 apparel references and 10 accessories, including shoes — revisits signature designs from the past five years, reworked and updated to create a coherent message.